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Airbnb's Explosive Growth Draws Big Cash (and a big valuation)

According to a published report, Airbnb is completing a third round capital raise that values the company at over $2 billion. The latest round is rumored to have drawn about $100 million and was led by a firm that had not invested in the company yet.

The company, an online short-term accommodation-rental service, was valued at about $1.3 billion last year when it raised capital.

Growth! And Lots of It.

The company saw processed 5 million transactions between January and June of this year. It’s processed over 10 million since its found in the summer of 2008. The company takes about 10% of each transaction.

According to Airbnb itself, the overall growth has been compelling: availability in over 30,169 cities, 192 countries and hyper-intense growth among transactions, especially in the past year-and-a-half. Additionally, the company has embraced mobile and mobile has embraced Airbnb—26% of its traffics come from mobile devices, more than double its mobile traffic of a year ago.

The focus on peer-to-peer room rental sets Airbnb apart from other accommodation-booking services are targets a different type of client. The site’s list of prices for rooms or apartments varies to match any budget—perfect for exploring a new city for a few days on a budget, which is probably why the company’s services are catching on worldwide: comfort plus frugality is a combination travelers the world over can agree on.

It would be interesting to see whether Airbnb is profitable—not that taking a loss in the face of such massive growth would be a serious detriment. If numbers are correct – or even close to correct – the company’s product is a winner. According to a report from 2010, the company has been profitable in the past.

Two questions remain for Airbnb: 1) How many more rounds of funding will the company welcome, and 2) What form will its exit take?

At the moment its capital is best spent on growth – personnel, promotion, new features, etc. – but what then? Will Airbnb find a home with a larger player in travel or search? Anyone have any guesses as to who might be interested? Will it grow to the point where an IPO makes sense? Are we sure the IPO market for tech firms is worth it right now?

There is no confirmation on who the latest lead investor is but venture players who’ve already invested in the company include Jeff Bezos, Andreessen Horowitz, Sequoia Capital, Graylock Partners, Digital Sky and actor Ashton Kutcher, among others.

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